BMW’s Effectual Approach

BMW is often lauded as one of the more innovative car companies.  This doesn’t always translate to the market share or the operating margins they want to attain to successfully challenge their competitors.  But they persist in trying innovative ideas and partnerships.  They are invested in deepening their entrepreneurial culture for the long term. 

Their recent ad for the new 7 Series gives some insights as to their approach.

“At BMW we believe the best way to predict the future is to create it” the narrator says.  This sums up the Effectual mindset.  Successful innovation is less a product of prediction and more the outcome of a process of creation. 

Applying the Effectual mindset isn’t always easy for BMW.  True innovations can take time to gain acceptance.  This can lead to conflicts internally among managers who prefer to go after volume rather than taking the time to cultivate demand for something new.

But BMW persists in looking at their internal assets as more than just a line up of products.  They are aware that they also have an abundance of talent, experience, skills, history, and relationships that they can draw on for the next big new thing.  They mine these for ideas and assets that they can apply in new and innovative ways.  In other words – they exercise the Bird in Hand Principle of Effectuation. 

They’re also not afraid of forming partnerships with others – consumers, unrelated entities, and even competitors.  They openly solicit ideas from consumers for innovations and they have an incubator to foster start-ups in fields that are mutually beneficial.  They have a partnership with the city of Copenhagen and the public transportation network there.  They are also exploring ways they can connect with Toyota’s truck team.  These are all evidence of Effectuation’s Crazy Quilt Principle

Another Effectual principle they apply is that of Affordable Loss.  Their management has stated that they won’t fund loss leaders to compete with Silicon Valley’s start-ups.  Their innovations have to provide a short-term return horizon. 

Driving a BMW can be an exhilarating experience.  But at BMW, they know that driving the future can be even better. 

--Written by Sara Whiffen, Founder & Managing Partner, Insights Ignited LLC